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In Re: David B. Ramsey and Donna R. Ramsey v. David B. Ramsey; Donna R.

August 3, 2012

IN RE: DAVID B. RAMSEY AND DONNA R. RAMSEY, DEBTORS. JEREMY J. GUGINO, CHAPTER 7 TRUSTEE, APPELLANT,
v.
DAVID B. RAMSEY; DONNA R. RAMSEY, APPELLEES.



Appeal from the United States Bankruptcy Court for the District of Idaho Honorable Terry L. Myers, Bankruptcy Judge, Presiding Bk. No. 11-00977-TLM

SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT

MEMORANDUM*fn1

Argued and Submitted on June 14, 2012 at Boise, Idaho

Filed - August 3, 2012

Before: JURY, MARKELL AND HOLLOWELL, Bankruptcy Judges.

Chapter 7*fn2 trustee, Jeremy J. Gugino, appeals the bankruptcy court's order overruling his objection to the homestead exemption claimed by debtors, David and Donna Ramsey, in unimproved real property.

The trustee's objection raised the question whether debtors had the "actual intent" to make the unimproved real property their "homestead" within the meaning of Idaho Code § 55-1001(2). After an evidentiary hearing, the bankruptcy court ruled in favor of debtors and allowed their homestead. We AFFIRM.

I. FACTS

On April 7, 2011, debtors filed their chapter 7 petition. Gugino was appointed the trustee.

In Schedule A, debtors listed real property located on Palmetto Drive in Eagle, Idaho (the "Palmetto Property") with a current value of $250,000 and encumbered by secured claims in the total amount of $394,184.63. They also listed an unimproved five acre lot located forty-five miles from Boise, Idaho (the "Elk Meadows Property") with a value of $37,000 and unencumbered. In Schedule C, debtors claimed the Elk Meadows Property exempt as their homestead under Idaho Code §§ 55-1001, 55-1102, and 55-1103.*fn3 Debtors' Statement of Intention showed that they would surrender the Palmetto Property.

2 The Trustee's Objection To Debtors' Homestead Exemption 3 On May 7, 2011, the trustee objected to debtors' exemption 4 on the grounds that they could not meet the "actual intent" 5 requirement to make the Elk Meadows Property their "homestead" 6 under Idaho Code § 55-1001(2).

The objection was based on 7 debtors' testimony at the § 341 meeting of creditors.*fn4 Debtors 8 testified that they planned on residing in the Palmetto Property 9 until it went into foreclosure and then rent a residence in 10 Boise until they could start building a house on the Elk Meadows 11 Property. The trustee argued that debtors' ability to build the 12 house was predicated on them finding work and receiving 13 financing to actually build the house. These plans, the trustee 14 asserted, were "too speculative" to demonstrate "actual intent".

15 Finally, the trustee pointed out that debtors had been trying to 16 sell the Elk Meadows Property off and on since 2009, which was 17 inconsistent with their professed intent to build a house and 18 make it their principal residence.

19 The Evidentiary Hearing 20 After further briefing from the parties, the bankruptcy 21 court held an evidentiary hearing on September 26, 2011, at 22 which debtors and their real estate agent, Vern Mathie, 23 testified.

24 Debtors' testimony can be summarized as follows:

In 2002, debtors purchased the Palmetto Property and had been living in the house continuously ever since. In December 2 2005, debtors purchased the Elk Meadows Property. At that time, 3 debtors were gainfully employed and their plan was to pay off 4 the mortgages on both ...


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